Pro-Dex (PDEX)

Holders of NQOs do not realize income as a result of a
grant of the option, but normally realize compensation income upon exercise of
an NQO to the extent that the fair market value of the shares of Common Stock
on the date of exercise of the NQO exceeds the exercise price paid. The Company
will be required to withhold taxes on ordinary income realized by an optionee
upon the exercise of a NQO. In the case of an optionee subject to the
"short-swing" profit recapture provisions of Section 16(b) of the
Exchange Act, the optionee realizes income only upon the lapse of the six-month
period under Section 16(b), unless the optionee elects to recognize income
immediately upon exercise of his or her option.